Spanish hedge fund threatens to sue over Greek bond losses

Madrid-based hedge fund Vega Asset Management has threatened to take legal action against officials negotiating Greece’s debt restructuring if its bond losses turn out to be too deep.

Vega wrote to investors this month to say it would consider suing if Greece insisted on write-downs of more than half the net present value of the debt, reported the Financial Times.

“Vega believes that, given the current position of the official sector, a voluntary exchange that implies a NPV loss of 50% or less is not now a likely outcome,” Jesús Sáa Requejo, a senior Vega executive, wrote in the letter on December 7.

“Vega needs to start considering all available legal options to refuse and challenge any exchange that implies a NPV loss of more than 50%.”

The asset manager was an original member of a steering committee for bondholder negotiators, but has now resigned from the committee.

Bondholders agreed to a 50% haircut on the face value of their bonds as part of a €130bn second bailout deal for the troubled economy negotiated in October in Brussels.

The haircut should knock around €100bn off Greece’s €350bn debt pile.

European leaders hoped to complete the deal by the end of this year through a bond swap, where debt holders exchange their holdings for less valuable notes.

However, the deal has been left opened as specifics failed to be agreed upon.

According to the FT, Vega is thought to have been upset by the negotiating approach of Greece and the international lenders, including the European Union and the International Monetary Fund.